International Strategic Management: A Case of JB Hi-Fi

This paper analyzes the strategic management of JB Hi-Fi, a retailer of consumer products. It discusses the micro and macro-environment in which the company operates, its competitive advantage, Porter's generic strategies, and growth strategies using Ansoff model.

International strategic management 1
International strategic management: A case of JB Hi-Fi
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Table of Contents
Executive Summary.......................................................................................................................3
Introduction....................................................................................................................................4
The Micro and Macro-Environment in Which JB Hi-Fi is Operating.....................................4
JB Hi-Fi’s Competitive Advantage over its Rivals.....................................................................6
Porter’s Generic Strategies...........................................................................................................7
JB Hi-Fi’s Limited Sales and Growth..........................................................................................9
Conclusion....................................................................................................................................11
The Recommendation at the Functional and Business Level..................................................11
References.....................................................................................................................................13

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Executive Summary
The paper determined the strategic management of JB Hi-Fi Company, which is a retailer
of various consumer products including electronic home appliances, Blue-rays, computers and a
number of Telstar services. The company has an operating income of A$221 million, net income
of A$152 million and revenues of A$4 billion. The company is operating under competitive
macro and microenvironment. Factors like political uncertainty, social-cultural factors,
technologies, and legal issues have been key determinants of the organizational success. Macro
environment factors like organizational structure, culture, and competent staff have enabled the
organization to survive the competitive edge in the market. The company has gained a
competitive advantage because of high brand trust, customer loyalty, low prices, delivery
services, and high-quality work. The company has adopted a pricing strategy to survive the
competitive environment. Differentiation generic strategy has been used by the organization to
increase sales and customer satisfaction. Ansoff model is used by the organization to determine
its future opportunities and growth. The paper also pointed out that JB Hi-Fi company need to
improve the current products to meet customers’ demands. The company is recommended to
implement a 24/7 support system, advance its technologies, implement a mobile application with
latest features and comparability to all mobile devices.

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Introduction
JB Hi-Fi Limited is an Australian company operating in the consumer electronics
industry and engaging in the selling of home consumer electronic products including digital still,
home theatres, mobile phones, video cameras and televisions, including electrical accessories
like small electrical appliances, air conditioners, computing equipment and kitchen equipment,
and other things like games and movies and car sound systems (Needles Powers & Shigaev 2009
p. 13). The organization stocks a range of exclusive specialist Hi-Fi products. The company’s
subsidiaries include JB Hi-Fi NZ Limited, Rocket Replacements Pty Ltd, JB Hi-Fi Group Pty
Ltd, and JB Hi-Fi (A) Pty Ltd.
Established in 1974 by Mr. John Barbuto who was a simple philosopher, JB Hi-Fi started
a business from a single store in Victoria and delivered various Hi-Fi equipment including
recorded music at a low price in Australia. However, the business was sold in 1983 and nine
other stores were opened in 1999 (Roy et al. 2013 p. 16). Aiming at taking the business to be a
success over the nation, senior management and private equity bankers purchased the company
in July 2000. In October 2003, the organization was floated on the Australian stock exchange.
Later in 2004, JB Hi-Fi bought the Queensland Clive Anthony stores which sold consumer goods
like air conditioning equipment, consumer electronics, and cooking appliances before being
bought (Gettler 2011 p. 7).
The Micro and Macro-Environment in Which JB Hi-Fi is Operating
The micro and macro-environment factors have a significant role in the determination of
factors impacting the long-term profitability of companies in various country markets. JB Hi-Fi
operates in retail in different countries and has exposed itself to different political system risks

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and types of political environment and forces, with the achievement of success in such a dynamic
retailing industry being linked to the diversification of political environment systematic risks.
The importance of the retailing sector and political stability affect JB Hi-Fi. The risk of military
invasion and high corruption rates and levels of retailing industry regulation pose great
challenges to the company. Other factors include interference and bureaucracy in the retailing
industry by the government and pricing regulations.
According to Borio (2014 p. 198) factors of the macro environment including economic
cycle, foreign exchange rates, interest rate, savings rate, and inflation rate determine the
aggregate investment and the aggregate demand at JB Hi-Fi, while factors of the
microenvironment including competition have impacted the firm’s competitive advantage. The
organization can use economic factors such as inflation, growth rate, and economic indicators of
the industry including the spending of customers and the growth rate of the retailing industry in
forecasting the trajectory of growth for the company. Other various economic factors which JB
Hi-Fi faces its operations include economic system types in countries of operation, the
government’s intervention in the retailing and related market, quality of infrastructure in the
retailing industry, productivity and labor costs in the economy, unemployment rate, discretionary
income, economic growth rate, and level of skill in the workforce of the retailing industry.
The culture of the society and the way people do things impacts an organization’s culture
in an environment. A population’s attitudes and shared beliefs play a great role in how JB Hi-
Fi’s marketers understand a given market’s customers and how they design the marketing
messages for the customers of the retailing industry. Social environment factors affecting JB Hi-
Fi include leisure interests, attitudes, demographics, and the population’s skill level, power,

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hierarchy, and class structure of the population, education standards and education level in the JB
Hi-Fi’s industry, culture, entrepreneurial spirit, and the society’s broad nature.
Technology has been disrupting various industries across the globe fast. For example, the
taxi industry has experienced domination by players like Lyft and Uber (Glöss, McGregor &
Brown 2016 p. 1639). Firms should technologically analyze their industry and the speed at which
the technology is disrupting the industry. The technological environment of JB Hi-Fi is affected
by various factors including recent technological developments by the firm’s competitors, the
impact of technology on product offering, cost structure impact on the retailing industry, value
chain structure impact, and the rate of technological diffusion (Burns & McGrail 2012 p. 44).
Various markets have different environmental standards and norms impacting the
organization’s profitability in the markets, whereby states in a country can have different liability
laws and environmental laws. Environmental factors affecting JB Hi-Fi and which should be
considered before starting new businesses in existing markets or venturing into new markets
include laws regulating environmental pollution, weather, and climate. In different countries,
institutions and the legal framework are not robust enough to protect an organization’s individual
property rights. Some legal factors affecting JB Hi-Fi include data protection, health and safety
law, employment law, consumer protection and e-commerce, copyright and patent, the anti-trust
law in the retailing industry, and discrimination law (Meiners, Ringleb & Edwards 2014 p. 120).
JB Hi-Fi’s Competitive Advantage over its Rivals
The company has reinforced its strength through success in buying out competitors,
providing a shopping experience, and cultivating a reputation for knowledgeable staff. JB Hi-Fi

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announces high sales as compared to its competitors, with comparable sales rising each year. The
Good Guys, a competitor of JB Hi-Fi, was put down due to conditions which were challenging in
home appliances. Overall, the organization does remarkably well, recording a comparable store
growth of 6% in 2018 alone. JB Hi-Fi’s growth has been attributed to a large percentage of
Australians choosing to shop at the organization regardless of the availability of other electronic
stores.
JB Hi-Fi has been maintaining a wide footprint and a mastery in the game of electronics
retail. The success of the organization over its competitors has been attributed to its compelling
in-store experience. Additionally, the organization has diversified from hi-fis to a wide range of
appliances and electronic gadgets including fridges and phones. Furthermore, the company has
an underlying strength of behavior shopping, where customers have the sense of behavior
shopping when they enter the store. JB Hi-Fi does not have a franchise model, which has highly
contributed to its performance. Furthermore, the company has employed staff which is engaged
in the product and have a high level of expertise. JB Hi-Fi has bought The Good Guys, a
company which retails electronic products, thus increasing its competitiveness by being able to
buy in bulk. Moreover, the company’s diverse stores do not sit in shopping centers where there is
containment on the range of products they can offer.
Porter’s Generic Strategies
Porter’s generic strategy is defined as a way in which a firm is positioned within an
industry (Ormanidhi and Stringa 2008 p. 55). The generic strategy allows the business executives
to pay attention to key essentials of organizations business-level strategies and avoid competition
in the industry. According to Tanwar (2013 p.11), there are two competition dimensions

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including firms source of competitive advantage and firms scope of operation which is a key
determinant of business-level strategy. Source of competitive advantages determines whether the
firm keeps costs down to gain a competitive age or offers a unique product in the market. Firm’s
scope of operation determines whether the organization focuses on a segment of customers or
customers in general.
JB Hi-Fi Company follows a differentiation generic strategy to market the products and
attract more customers. According to Animesh, Viswanathan & Agarwal (2011 p.153), a generic
differentiation strategy is an approach which an organization takes and develop unique services
or products for customers to distinguish them from competitor’s services and products. In a
differentiation strategy, the organization is distinguished from competitors. Differentiation
strategy selects only attributes that are important to buyers and satisfies demands of customers in
a competitive market. The products of JB Hi-fi organization have uniqueness in both pricing and
quality. The organization has recently differentiated itself in the market from competitors by
offering pocket-friendly prices, after sales services and guaranteeing customers the products are
genuine and long-lasting by offering long warranties in their products. The company has
developed a good reputation in the industry because of high customer delivery and customer
satisfaction.
Furthermore, in 2014, the company was ranked 1st in Corporate Reputation Index as
released by AMR reputation index and has successfully ventured an online platform with sales
increasing by nine percent from a previous year and accounting for 2.4 percent (Hopkins, 2015).
Other innovations like online self-service have provided convenient services to customers easily.
The main competitor of JB Hi-Fi is Harvey Norman. The company has high customer loyalty in

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Australia having previously recorded high sales and good foreign markets as it exports its
products and services to Croatia, Montenegro, and Kosovo. However, in terms of domestic
markets, JB-Hi-Fi has a great focus on the continent. The company has a high investment in
technology as it offers high online and offline services and provides free delivery on all orders
irrespective of prices. Customer’s transportation costs have cut hence the majority of retailer’s
orders products in bulk. The organization further offers discounts and vouchers to their
customers making the prices of products look relatively cheap. In general, JB Hi-Fi uses a
differentiation strategy to gain a competitive advantage as it can be seen in terms of quality,
customer loyalty, brand trust and low prices with discounts. Customers prefer the JB Hi-Fi
products because of free delivery services, best prices with quality and after sales services
including free installations and warranties.
JB Hi-Fi’s Limited Sales and Growth
JB Hi-fi Company has experienced rapid growth with the company attaining a growth score
of 5.0 percent, which is the highest among all competitors. The strategies and marketing
techniques have attracted more customers and played a significant role in organization growth.
JB Hi-Fi Company has growth strategies that are a key determinant to the organizational future
continuity of retaining customers and generating high incomes. According to Pleshko and Heiens
(2008 p. 108), different strategies determine the growth of an organization and through Ansoff
model, an organization can strategically plan, identifies growth opportunities and devise
strategies for the future growth. The two basic factors covered in the Ansoff matrix include
products and market. In terms of products, JB Hi-Fi strategizes on current and future products
while in the market, the company strategizes on the geographical area it serves and how it will

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expand its market. The basic factors are analyzed in terms of product development, market
development, product penetration, and diversification.
The company follows the strategy of product development. The CEO of JB Hi-fi company
stated that the strategic process of the company to generate $15 to $20 million is still underway
although it could take a maximum of five years. In terms of market penetration, JB Hi-fi has an
ability to develop new opportunities and Networks across the country with the company having
good market access in Australia. The company is still in process of market entry strategies on
other regions of Australia. The accessibility of markets and culture of customers has developed a
good opportunity for JB Hi-Fi company market entry. In terms of market development, the
organization has generated high-profit margins and sales turnover because it has completely
explored all markets by segmenting customers by the priorities and loyalties. Furthermore, the
ability of customer networking and advanced technologies used by the company has enabled the
company to build positive consumer experience.
In terms of product diversification, the company follows both vertical and horizontal
diversification. In vertical diversifications, the company has collaborated with dell computer
manufactures and Apple manufactures and has significantly benefited from monopolistic
markets. Furthermore, the collaboration has made the company have a strong tie with researchers
to determine the latest technologies in the market. In horizontal Diversification, the company has
been launching new products and services in existing services, products, and markets. For
example, upon review of feedbacks from the customer, the company keenly look for strategies of
improving the initial products to make sure it enhances customer satisfaction.

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Conclusion
The company has become popular in the country by offering the largest options for home
entertainment. The company has faced great challenges for several years from its competition
with the industry experiencing high new products entrants, substitute’s availability and customer
bargaining power. The genuine services implemented by the company has been a key driving
force for the company. The product life cycle is still in the mature phrase with new improvised
techniques introduced on daily basis.
The Recommendation at the Functional and Business Level
The company is operating in an era where technology has dominated and companies that
are not utilizing technologies like mobile app are far behind in standing the competitive markets.
According to Chen (2015 P.50), many people like checking details through mobile apps.
Therefore, the company should advance its mobile application platform to hold the latest
functionalities and capability that are accessible in diverse devices.
The company is a home retail should provide tech support 24/7 to their customers.
According to Porter and Heppelmann (2014 p.64) companies that offer 24/7 support develops
customer confidentiality to the products. Therefore, JB-Hi-Fi needs to implement 24/ hours
facilities for their customer to consider product ideal. Furthermore, as the world is evolving and
everybody is talking about the web, the organization need to create awareness of its products
through social media advertisements. The social media adverts will create brand popularity and
commercialized the product showcase. The company also need to put innovation into their
product implementation strategy. Starting from organizational inception, it is still serving the
customers with similar products option of Blu-ray disks, large home appliances, CD, DVD, and

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computer components. To excel in a competitive market, the company need to launch different
products in the market and continuously updating the existing ones.

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[Accessed 29 Sep. 2018].

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